Morale a make or break issue for airlines
Steve Creedy | March 13, 2009
Article from: The Australian
GREG Bamber has a simple and often ignored message for airline executives: treat your people well and it will pay dividends.
The director of research at Monash University's Department of Management argues that airlines that engage with their workers provide a better return to investors, as well as higher quality and more reliable services.
He is today releasing a book examining airline employment practices in North America, Asia, Australia and Europe.
Professor Bamber and his co-authors -- Jody Hoffer Gitell, Thomas A.Kochan and Andrew von Nordenflycht -- looked at legacy and low-cost carriers in researching Up In the Air: How Airlines Can Improve Performance by Engaging their Employees.
Teams of people based at universities around the world made case studies about airlines during the research.
"We've ... had a lot of quantitative data. We've been able to draw material from the international civil aviation authority, for example, much of which has been unpublished or not analysed in the past," Professor Bamber said.
The researchers found that where airline staff and customers reported high and rising frustration about the way they were treated this often resulted in cuts to services and staff.
Falling morale led to increased problems, such as flight delays and baggage loss, that undermined a carrier's viability.
Professor Bamber believes too many airline executives and unionists assume that adversarial industrial relations are inevitable.
He advocates instead a "virtuous circle" where more can be achieved with co-operative industrial relations.
"It's an appropriate strategy for airlines to get into and, indeed, other businesses, particularly those involved in serving customers, as many enterprises do," he said.
The Melbourne academic argues that employee relations in legacy airlines often stem from their origins.
He notes that many were founded by pilots who had been demobilised after World War I and run on military principles. He points to Lufthansa and Continental Airlines as examples of legacy carriers that have benefited from good or improving employee relations.
"Continental was very lean and mean and nasty to its employees under a previous regime and we include some detail of its transformation," he says.
"It went into bankruptcy and was relaunched with a new approach that aims to be much more engaging with its staff. It's working with its staff rather than hitting them with a battering ram and it's been much more successful in its new incarnation.
"Similarly, in Europe, Lufthansa has been more successful than, say, British Airways. Lufthansa has sought to work with its people to a greater extent. (It has) ... councils and other forms of employee participation in decision-making to a much greater extent than British Airways, which has been following a more adversarial tradition, which has been typical of the English-speaking countries."
There are also differences in the new breed of low-cost carriers typically started by flamboyant entrepreneurs.
The Monash academic points to the differences between Dublin-based Ryanair, which does not treat its employees particularly well, and US carrier Southwest. He notes that Ryanair's reputation for not treating staff or customers well has not stopped it from eating into the legacy market in Europe.
But Southwest has also prospered.
"And it treats its people very differently," he says. "It's fostered employees engagement and employee commitment and participative decision-making. It has a very partnership-oriented approach in dealing with the unions that represent its people and it's been the most consistently financially successful airline in the US since its foundation in the early 1970s.
"So they are two polar opposites -- Ryanair and Southwest."
Professor Bamber questions the extent to which the Ryanair model will be sustainable in the long run. He says customers have been annoyed and alienated, while staff are largely disgruntled. "And that might come back to bite them."
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VA will need to pay more.
When the aircrew shortage returns they will lose crews and have difficulty manning flights, just as
VB did last year. Why put yourself in that commercial position? They may not need to pay realistic salaries now but that situation will change.